Oct. 24 (Bloomberg) -- Audit firms that make sure emission-reduction projects obey rules of the 1997 Kyoto Protocol may
stop accepting jobs on Jan. 1 because of surging risks
associated with their work, according to a lobby group.

Some auditors may “consider not requesting any further
registration or issuance of projects for at least some
categories as long as they consider themselves exposed to a non-acceptable risk,” according to a report e-mailed today by the
Designated Operational Entities and Independent Entities
Association in Geneva.

The Clean Development Mechanism executive board has asked
United Nations climate envoys in Doha, Qatar, to approve rules
that require so-called DOEs to buy and retire emission credits
in the market should regulators decide the firms’ work included
“significant” deficiencies, the lobby group said. Those rules
could damage an audit firm’s financial position while there are
no insurance products available, it said.

The association said UN envoys should consider requiring
some nations participating in emission-reduction projects to
accept the risk of replacing excess credits, according to the
report.

Alternatively, the executive board could identify a cap on
the total liability, which may enable development of insurance
products, the group said.

The CDM auditors make sure each project obeys market rules
derived from the UN-overseen protocol, which has targets for
industrialized countries through this year. They include SGS SA,
Det Norske Veritas Ltd., Tuev Sued and Bureau Veritas SA.